House plan starts to reveal itself: Tiny Permanent Fund dividend

HOUSE DIRECTION ON BUDGET: LESS THAN $500 PER DIVIDEND

Gov. Michael Dunleavy has proposed a $3,000 Permanent Fund dividend for all eligible Alaskans, and a budget for State government that is about a 21 percent lower than the one offered by Gov. Bill Walker, which was about $4.8 billion in undesignated general funds. Walker’s budget increased spending over this fiscal year by hundreds of millions of dollars.

Dunleavy said the Walker budget didn’t balance, and his lower number has left people all over the state in shock as they realize how much of a shell game the former budget was, and how much communities are going to lose in State services.

But the House Majority’s budget strategy is now beginning to gel and it looks like it will offer the Walker budget, with just a few trims around the ears. Right now, there are no big cuts planned.

House Finance co-chair Rep. Neal Foster is on record saying the budget will likely be static: About $4.8 billion, give or take.

In House Rules Chairman Chuck Kopp’s newsletter, he gives a sense of how that would be paid for: “With the right kind of management, and without new taxes, I believe that our state can afford the core services upon which Alaskans rely. If we prioritize keeping our communities healthy, safe, and prosperous over paying ourselves unprecedented dividends, we can run our state responsibly. This year the House Majority has committed to not spending money we do not have – we will not be advocating for new or raised taxes, we will not spend down our savings, and we will not over-draw from the earnings reserve account. Future generations are counting on us to be good stewards of our funds, and we’re not interested in jeopardizing the health of our state’s assets or our current economic recovery efforts.”

If these two things are true — what Rep. Foster said and what Rep. Kopp said — it means the Permanent Fund dividend will not be $3,000, as proposed by Dunleavy.

To pay for the Walker budget without new taxes and without digging deeper into the Permanent Fund Earnings Reserve Account, Alaskans would take an 84 percent haircut on their dividend.

The math shows that Permanent Fund dividends would be about $480, because State government would require the other $2,520 from every man, woman, and child. In other words, a family of four would lose over $10,000.

CHOICES FOR LAWMAKERS

These are choices that lawmakers are facing. No one yet knows what the Senate has in mind, but the two different visions from the Democrat-led majority in the House and the fiscally conservative governor are coming into focus.

What is likely to happen is that both the House and Senate will find cuts, but also tap the dividend to make up the difference. This is where things are very elastic — so far, neither the House nor Senate have produced their own budgets, and Democrats are trying to get Dunleavy to start bargaining his own budget away.

The veto pen is powerful. But the governor can only veto spending, not add money back, once the House and Senate decide what their spending levels will be. If the dividend amount that reaches his desk is $500 or $1,000, Dunleavy will not be able to increase it.

APOCALYPTIC HOUSE PLAN?

Last Wednesday in House Finance, the Dunleavy Administration’s chief economist presented a scenario that actually was what that House plan would look like.

With no cuts to spending, and using the “Percent of Market Value” method to fund the existing state budget and a dividend of under $500, after two years, the entire draw from the Permanent will be consumed by the growing budget, which increases naturally due to increasing step-and-merit wages, and other cost increases.

(A percent of market value draw from the Earnings Reserve Account, as opposed to a fixed draw, is based on a multi-year average of the Permanent Fund value.)

Perhaps not knowing he was actually presenting the House Majority’s current direction on the budget, King’s slides revealed the problem the House Majority faces.

The Majority members on House Finance looked visibly unnerved at Slide 10 of the presentation, which shows that the Permanent Fund dividends will go away in five years if the budget is not cut down to match revenues.

By then, dividends would be so small as to barely be an important part of a family’s budget. When the Earnings Reserve Account is gone, taxes would follow to feed government. But that’s years down the road at least.

Like this:

Share

Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

Beth Fread/March 10, 2019

These people are blinded by their own rhetoric. They think we do not know that the $16 Billion in the Earnings Reserve Account belongs to the Legislature. If they like being in Juneau so much, they shouldn’t try this kind of baloney. Taxing the PFD takes $1 Billion plus (and we already know it will be more than half) out of the economy. Both ISER and their own economists have said that Walker’s, Kelly’s and Edgmon’s PFD taxes deepened the recession. Well wake up Juneau, we’re still in a recession.

/

Bill Jackson/March 11, 2019

I realize you’re upset with the legislature and, heck, who isn’t – they’re a bunch of boneheads for sure. But what does the town of Juneau have to do with the way politicians behave? I’ve lived in Juneau for almost 38 years now and am getting a little tired of the constant inference that the good people of Juneau control the legislature. Politicians are going to be politicians not matter where they happen to hold their sessions. And they’re going to continue to tell us one thing when running for office and do the exact opposite after elected – that’s the way most of them are.

Instead of saying “down in Juneau” and “wake up Juneau”, how about just calling them the legislature, or politicians, or $#@!& and leave the inference out?

/

eriv/March 11, 2019

I might be wrong – I thought Juneau was the most left wing city in Alaska making it a very accommodative environment for excessive spending.

Agree you on the boneheads a left wing town has plenty to criticize even without boneheads.

/

Art Chance/March 12, 2019

I lived there nearly thirty years, most of it as a direct report to political management and the last years of it as a Republican political appointee. Juneau has lefty interest groups because it is the Capital, though most of them have offices here in Anchorage since there are far more State employees in ANC than JNU. Downtown Juneau is no more leftist than the South Addition/Park Strip area of ANC. The Mendenhall Valley is as Republican as most of South Anchorage.

State employees are largely unionized and almost all of the unions are nothing more than Democrat fronts, but they really can’t much influence the votes of more than a 20-30% minority of their members. Actually the local government in Juneau is much more conservative than the local government in Anchorage. Unlike Anchorage, ER, and the Mat Valley, there are a significant number of people in Juneau who can read a budget and know what they’re looking at.

/

Beth Fread/March 11, 2019

Mr. Jackson, I think Juneau is a great place to visit and I’ve only been there twice, for conventions. But, even the Legislators and the Governor agree that it is like a bubble unto itself. There are lobbyists, the faithful Juneau-ites, who generally disagree with our politics, and that’s about it. The rest of the state is challenged in going before their legislators to testify, it’s an expensive trip. Generally, we can’t jump on a plane at any time to ‘talk’ with them when we need to have a conversation. Yes, we call, yes, we write, but NO we can’t get in front of them.

/

Bart Colgrove/March 13, 2019

Move the capital so that we can all participate in our state government stop the hiding .

/

Ronald Clifford Williams Sr/March 13, 2019

I believe the capital Alaska should be in Anchorage
Look at the amount of money politicians spend traveling back-and-forth to Juneau paid for by the citizens of Alaska

/

Chris Nyman/March 11, 2019

Beth: “Taxing the PFD takes $1 Billion plus (and we already know it will be more than half) out of the economy.”

As a conservative, I would prefer that we not have an economy over-inflated by a irrational government stimulus program (PFD).
As a conservative, I also believe that our State government is too large and needs to be cut.
The sausage is made in the Legislature. I think things are progressing as well as to be expected (it is by definition a political process).
Every $300 million cut from the budget increases the capacity for a larger Dividend by $500. The Legislature might be able to squeeze a $1000 Dividend without borrowing this year.
I would go further afield here and pay off the oil tax credits 100% (less an early payment discount) and also begin to re-pay the CBR from the PFER. This would be in addition to the 5.25% statutory limit POMV used for government and the Dividend. The argument against taking these funds from the PFER is that it reduces the principal value of the PF and its annual earnings and reduces the annual POMV – thus reducing funds for government AND the Dividend.

/

Mongo Like Candy/March 10, 2019

At what point in the chart shown in the slide do these Neo-Marxists and their RINO facilitators begin to fear their fellow citizens?

/

Beth Fread/March 10, 2019

When their constituents write AND call them.

/

Steven Chappell/March 10, 2019

They should and if I were Governor Dunleavy I would go on every radio station and every TV statio and let the Alaskan people know the legislature is going to take your Dividend

/

Timothy Robinson/March 11, 2019

Mike knew how to get elected (he is a politician after all), but knows that the PFD is not going to be a Full PFD for sometime.

/

Maverick/March 10, 2019

That won’t do it, Beth. No election until 2020. They don’t listen to constituents concerns except to overstate the numbers of calls in support of their own agendas. They ALL play that game. THIS IS WAR! The citizens have to get mad at those who will ruin it for us all. The citizens have to revolt. One giant tea party and coming soon.

/

Beth Fread/March 11, 2019

I started poking at the previous governor in 2016 by encouraging everyone to help him keep his promise that he only needed one term by not voting for him in 2018.

/

/

Rob B./March 10, 2019

Based on that chart, it appears some type ‘tax’ will double from 2040 – 2050. Think about what is currently happening in high tax states such as NY, CA, NJ, etc? Thats Right(!!!) … Folks are liquidating themselves from over-taxation and migrating elsewhere to lower tax states and, it’ll also happen here unless the AK State Gov’t is right-sized / fit-for-purpose.

So, in 20-30 years from today, where do you plan to be and have you accounted for this ‘tax’ in your Retirement Plan, If you plan to retire in AK? If you plan to exit AK in 20-30 years, as many will most likely do, who will be here to buy your house, business, etc? AND, as the population will most definitely decline, who exactly will be remaining to pay these taxes, will taxes apply to ‘all’ citizens or just a certain demographic, and will those taxes need to increase because of the lower population?

It’s time to cut State Gov’t significantly …. NOW!

/

Gypsy23/March 10, 2019

Let’s boil this down to what is really going on. For the past 35 years there has been a growing rift amongst two different classes of Alaskans. Those with government jobs and those with non-government jobs. Those with government jobs fear that they will lose them, plus all the benefits that goes with, if the dividend is paid out at Dunleavy’s proposed levels. Those with non-government jobs need the dividend as some form of insulation in case of layoff or work slowdown. So, why should the non-government workers have to sacrifice their dividend so that the government workers keep their jobs plus benefits? That has always been the case. Dunleavy is trying to level the playing field and he was elected to do just that. Without being unkind, those with government jobs should be required to check the box in the PFD application form that says, “withhold from payout.” Now THAT would be fair, don’t you think?

/

I Art Laughing/March 11, 2019

And people that receive the PFD should check a box that says “withhold from services”. Deal.

Have fun getting to the airport you can’t use. Or to the store to spend your PFD.

/

Johnnie Greene/March 11, 2019

Art, Art, get a grip. Why go after essential services? You know well of the fat and graft in government. UA wages in the 100s of thousands. All of those state workers stumbling over themselves to get to the coffee pot first. Check the correct box, Art. You know in your heart and mind which one it is. Then, start laughing again.

/

I Art Laughing/March 11, 2019

I can laugh just fine. I’m not the guy out in Port Lions that’s not going to have any coffee. Maybe you should get a sea kayak so you can explain to him in November about your theory on what constitutes essential services.

/

At what point is Gov. Dunleavy going to lead? With this news, he hasn’t really done much in comparison to Walker. Too Bad!!! So, the voters that put him expected the SB 91 gone and new one in place, not so, just an editing on criminal points and now this…..What a mess this state will be in unless Dunleavy keeps his word…..

/

Wait a minute. In 1982, *I* was the future generation. “Just wait until years later and you’ll get a much larger PFD.” Now you’re telling me I have to pass the buck? What are you going to tell my children and grandchildren?

Stop cheating. If you need more money for government, do it the legal way. Do it the moral way. Don’t steal people’s PFD. That’s unfair taxation on the poor. Stop lying to every generation of Alaskans, too. >:(

/

db cooper/March 11, 2019

22% of every pfd check goes to the feds in the form of federal income tax. >10 of billion of dollars of our money sent to the feds to fund the EPA. Are we really that backcountry that we don’t see the irony? And poor judgement of our actions? those are our benjamins and they should be spent in alaska on Aladkans.

/

Nav/March 11, 2019

Audit the legislation and the legislatures them selves, fallow the money trail! When you start tracking every penny you get the big picture of these crooks.

/

Kayak/March 11, 2019

Alaskans need to stand up right now! Tell your legislators to enact the Dunleavy operating budget. It is a reasonable budget, reasonable in terms of Alaska work force participation, reasonable in terms of how much government we really need, and reasonable in terms of gross state product. Frankly, the situation is considerably worse than shown in Ms. Downing’s graph – excellent though the graph is. Alaska has legacy costs it kicks down the road each year, barely making payments to keep up and in many instances not keeping up. Those postponed costs are not reflected in that graph but must be paid in full withing the time-frame of the graph. All that can save us from fiscal calamity is enacting the Dunleavy budget in its entirety including changes to the oil and gas property tax as it applies to the North Slope Borough. Please call and email your legislators today!

/

ken federico/March 11, 2019

You mention oil and gas property tax as it applies to the North Slope Borough. Have you ever been to Barrow to see that 3/4 of the employees of the borough have take home cars? It seems like every third house has a NSB car parked in their driveway. Did you also know Barrow does not accept Federal or state monies for their roads? You don’t need a drivers license or even car insurance to drive up there. That is because they get that extra tax money from the oil companies. Those monies should be shared with all Alaskans, the same goes with Valdez with the pipeline terminal.

/

Beth Fread/March 11, 2019

Those monies are shared among the Regional Corporations. Some are less fortunate than the NSB. As for cars, they buy them themselves and have them shipped up. NSB Vehicles were around in 1982. Maybe they’ve become more prolific, but I’d bet they aren’t profligate items.

/

Bill Yankee/March 11, 2019

Try watching Dunleavy’s economics guy (King) try to pull the wool over the Senate Finance Committee last week in two different sessions, Kayak. King’s numbers don’t hold water and have been replaced by ISER’s and to boot, ISER says Dunleavy’s proposed budget will prolong our present recession.
Just my opinion here, but there is not a chance in a carload that this legislature will elect to prolong our recession in order to give out these large PFDs. It’s merely a trade-off: Smaller PFDs that result in smaller cuts to govt. and jobs.
No brainer IMO.

/

I Art Laughing/March 11, 2019

I like how a $500 PFD is an “apocalypse” but shutting off the ferries and rural airports without a plan and facing the prospect of paying the Federal government hundreds of millions of dollars in capital project refunds is fiscally conservative.

Any word on when we’ll be allowed to see the commissioners? Are they being well treated? Can the Governor provide proof of life?

/

Tom at the Bureau/March 11, 2019

To I Art Crying: Quit being a fatalist. It’s SO EASY to be a Bill Walker the Santa Claus with Alaska’s money. Mike Dunleavy has to clean up the mess. THAT TAKES GUTS!

/

I Art Laughing/March 11, 2019

That takes pretending that you can rewrite the laws and Condituition of the State with a budget and a nearsighted, short time OMB director.

/

Tons of cuts are possible for the State: 1) Stop underwriting the public sector unions who wastes our money (PFD funds included) lobbying for their causes on state time – yes, business leave extorted from employees is still state time wasted on political lobbying. Stop forcing contributions to the Union Healthcare trusts by employees with no need for the coverage. Stop all travel – if video teleconferencing is good enough for Bush medicine, then it’s good enough for government. No per diem for Legislators and no pay if they don’t get their job done in the required 90 days. Time to play hardball.

/

/

Hard for him to keep his word with a legislature that rapes its own constitutents

/

I Art Laughing/March 11, 2019

Wait, who pulled money out of the VPSO program? How are those sexual assault statistics looking? If a sexual assault happens in a community and law enforcement isn’t there to report it to, did it really happen?

.

But you weren’t talking about actual rape were you?

/

TED/March 11, 2019

It was Byron Mallott who dreamed-up and created new positions within the VPSO so he could groom the young daughters of the new employees he hired. Art, you need to give Dunleavy a Chance.
btw, where is your old buddy Byron?

/

I Art Laughing/March 11, 2019

Dunleavey had a chance. We got to see his budget. We’ve now seen the “back-up” and it’s an inexcusable dumpster fire.

.

You want to bag the VPSO program due to the existence of Byron Mallot? How much time have you spent in rural Alaska? (Rhetorical question).

/

The Judiciary Committee has centered all time and energy plus all those remarkable testimonies to one sexual assault case. Its unbelievable! They can’t get through any other crime or repeal of SB91 with all the millions of dollars lost due to thefts, damage and murders, just the one sex assault. They are making poor judgment decisions on a case that is one-sided, with no testimony of the victim. What a screwball group. Guess what? They were elected!!!! How about un-electing them!! Sex, Lies and Video Tapes!! What next in the Fraud, waste and abuse Legislature!!!

/

TED/March 11, 2019

What I don’t want are VPSO officers driving around in their squad four x fours in urban jurisdictions shoving around their badges on residents whom they hold no jurisdiction over. SEE the Fairbanks case last summer concerning Byron Mallott’s VPSO girlfriend’s charges. Byron had a series of bad days and needed relief with a youngster. Pathetic. Immoral. Indefensible. And you know it!

/

Judie Gauney/March 11, 2019

This is all factual about the disgraced Byron Mallott. The major daily’s remain silent to this day. Bill Walker remains silent. Byron Mallott had gone underground. Democrats avoid the issue. The only person brave enough to report was Suzanne. This story should have made national news, as it cost a seated governor his job. But all we get are…… …
……
Crickets.

/

I Art Laughing/March 11, 2019

Recall “Troopergate” and Mike Wooten? I suppose we should defund the Troopers. One strike, and it’s off to the glue factory for that agency.

I don’t understand why mentioning Byron Mallot suddenly waives the need for rural law enforcement. Your ideas about governance would give the Queen of Hearts a run for her money.

/

I Art Laughing/March 11, 2019

So you’re the guy that parked Jody in! Did your body guy get that all ironed out?

Apparently you think the VPSO program was nothing more than the Lt. Governor’s personal harem. Is that because they stopped you for a DUI and you had to wait for AST to show up or do you actually have something like proof?

/

TED/March 11, 2019

It’s all in the court records and can be examined, Art. Fairbanks Superior Court, 4th Judicial District. 2018. Mallott’s girlfriend used her VPSO four-by to move another car out of her way, costing thousands of dollars in damage. No note left behind. Thought she got away, but bystanders got her license plate number. Drunk driving too. These people think they are entitled, like Byron Mallott.

The incident played out by Sarah Palin’s AST brother in law made national news. But Mallott’s escapades with young girls was covered up by Walker, the press and by Democrats.

/

Sok Ful O Monee/March 11, 2019

A shell game, for sure.

For a State chock full of dollars, we sure act poor don’t we.

/

Hannah Ramiskey/March 11, 2019

I don’t always agree with Suzi Orman- but one message of hers has always made sense–you cannot save money, nor get out of debt, by making more money. If you make more you will spend more. The only way to remove debt is to spend less. Sounds simple–but we just keep growing. We are still in the early to mid 80’s mode of increasing government and wages at an alarming rate.

When our representative says that he worked to “cut” anything, I smirk and asked if the program will have less funds this year–or are we talking about only raising the funds by two million when he originally suggested it be raised by four.( which, in his mind, constitutes a two million dollar cut). Even locally, Ketchikan just negotiated a teacher contract they knew they couldn’t afford and the city just gave the manager a more than $20,000 raise—this fully knowing that the State will be cutting back on contributions to cities and boroughs. Sounds like a national trend of ignoring the facts of basic bookkeeping.

/

Steve-O/March 11, 2019

More specifically, this entire 1.6 dollar budget cut is a cut on a bloated budget proposed by the previous and failed administration on its way out the door. In fact the overall dollar difference is 100-200 million dollars. The deck chairs have been rearranged but the ship, it is still a sinking!

Unless and until real cuts are made this is all an exercise in prolonging the inevitable…the inevitable being all the cash is gone including the entire Permanent Fund and all the oil taxes ever paid.

/

Bill Yankee/March 11, 2019

That is just your opinion Steve-O but is not that of either the House or the Senate (Senate just stated they will not cut the budget to prolong our recession).

/

I Art Laughing/March 12, 2019

but there is no joy in Muddville….

/

Bill Yankee/March 12, 2019

That the mighty Arduin has struck out??

/

I Art Laughing/March 12, 2019

Again.

/

Steve-O/March 12, 2019

In the annual what is the actual budget game that gets played here is what I have been able to find.

FY 2019 (last year) the total budget was $10.936 Billion, this including the $1.02 Billion paid for the PFD.
For FY 2020 (this year) the failed Walker Administration proposed an $11.5 Billion budget, including the PFD.
For FY 2020 (this year) the Dunleavy Administration has proposed an $11.024 Billion budget, including the $1.9 Billion proposed to be paid for the PFD.

Year over year that would be an actual increase of $88 Million, it would be a decrease of $476 Million from the fiscally irresponsible budget proposed by the failed Walker Administration.

These numbers could be incorrect as I have seen other numbers, but here is where I got these sets of numbers from.

/

Swede/March 12, 2019

They used to tar and feather liers , cheats and scam artists

/

I Art Laughing/March 12, 2019

Yeah, Dunleavy was the deciding vote in 2011 as the Mat-Su School Board President to accept grant monies on a 30/70% Borough/State split. Walker set it back to 50/50 and now that he’s sitting on the other side of the table Dunleavy wants to stick the Mat-Su with the whole bill. What a honest visionary of deep personal conviction hey?

/

Olivia Felkers/March 12, 2019

This is a sad situation, the people are the one’s who suffer not the government. The place to cut corners is in the way they govern. Staying in hotels during session, eating meals out there is so much overspending and projects that go nowhere like the bridge out on KGB to name one. The Senior people in this State look forward to the PFD I have many friends who buy wood and fuel for the winter stock their pantries and pay for medicines and other necessities . I know families who have tight budgets that depend on this money. It benefits them and it benefits the economy just after the tourist trade leaves we feed the economy with what we get from the PFD well enough said this is a sore spot with many people, please consider making the right decision for the Alaskan People this time instead of special projects that go nowhere.